3 Benefits of a First Time Home Buyer Grant

Applying for a first time home buyer grant is time consuming and challenging. You will need to write a grant application, as opposed to simply filling out a form. This application will have to show why you are worthy of receiving the funding. Namely, your grant application will have to prove to the organization distributing the funds that you will put them to better use than any other applicant. This may require you to show you are stimulating a local economy, providing for a sustainable future for your family or other similar benefit. While the process can be time consuming and challenging, if you earn a grant, you will be happy you took the time to apply.

#1 Grants Are Not Credit Based

You do not get evaluated based on your financial strength for a grant. Actually, those individuals who are needier may have a better chance of achieving a grant. This is very different from loans and loan guarantees. Loans and guarantees evaluate your qualifications based on your income, debt and assets as well as how you have performed on debts in the past. A person who has a short financial history or a low income will rarely qualify for the best options. Grants, on the other hand, only evaluate whether you will put the money to good use. Of course, this requires you have some degree of financial savvy, but your credit score is not as important as your future plans.

#2 Grants Pay Upfront Costs

Grants do not help pay the cost of your mortgage. In fact, most grants are rather small, less than $20,000 and usually less than $10,000. These grants, though, can help you cover the upfront costs of home ownership. This is particularly important for first time home buyers who do not have a home to sell in order to generate a down payment and other costs. While many individuals can afford a mortgage payment, many are precluded from ownership because they cannot afford the upfront requirements like closing costs and origination fees. The grant can help you cover these costs, leaving you only with the expense of the down payment and the mortgage. On an average home, this will save you 3-5% of the total cost of the home.

#3 Grants Are FREE

The main reason to dedicate the time required to achieve a first time home buyer grant is you do not have to repay the grants at any point in the future. You will always be required to repay loans, and the majority of them at high interest rates. Grants are completely free money given to you because an organization believes you can put the funds to the best use. With the many requirements to start paying a mortgage, furnishing a home, paying homeowners taxes and other maintenance fees, it is a huge benefit to be able to simply walk away from a grant approval without any obligation to repay the funds in the future. You will end up saving far more than the grant amount; you will be saving a lot of stress.